Show BUSINESS and the STOCK MARKET by BABSON'S REPORTS os w. w APPAREL SALES SALES SALES' OUTLOOK BRIGHTER The slowdown in consumer spending has wrought havoc on sales and earnings earnings earnings earn earn- ings of apparel retailers In fact operations operations oper opere and profitability in this segment of the economy have been disappointing disappoint disappoint- ing during the latter part of 1969 and through most of 1970 Owing to the concept concept concept con con- of total merchandising however some retail outlets have not suffered severely because turnover of general merchandise has offset the decline in demand for clothing Fashion Rules Rul Apparel Demand There has been tough sledding for the entire apparel industry Part of the problem problem pro pro- blem arose from the sharply negative response to the radical plunge of hemlines hemlines hem hem- lines in women's outerwear This has been beenEn in marked contrast to the previous enthusiastic reception of the mini mini skirts While the th fight raged over the mini mini- midi midi maxi max designs demand for women's apparel waned noticeably Uncertainty as to the ruling fashion and lack of a favorable reaction to both beth the midi and the max maxi prompted prompt prompt- ed cautious buying on the part of both beth consumers and retailers More recently recent- recent ly there has been a considerable swing toward pantsuits and separates General Sales Sal Lag While demand for clothing has been beena a victim of these drastic fashion changes changes changes chan chan- for more than a year this has been far from the whole story of the difficulties difficulties dif dlf in retailing The volume of total retail trade has actually been languishing languish languish- ing for the past two years For example sales of home furnishings furniture appliances appliances ap ape and TV sets have lagged due to the low level of home building Monthly retail sales figures seasonally sea sea- adjusted have held In a peak range during this period but the trend has been sidewise and not higher It has been price hikes not unit gains which have kept dollar sales volume at ata a high level On the basis of a constant dollar dolIar indications are that the physical volume of retail trade has been losing ground Consumer Sentiment Cautious There are many reasons for the lack of vitality in consumer spending at a time when a rapidly growing population and a strong in personal income should be having an optimistic effect For one thing the Vietnam war and tensions dampen confidence Moreover demonstrations and other social disruptions keep many women from shopping as often as usual And there has been definite resistance to soaring prices Other developments making mak male ing consumers less eager to buy Gloomy business and employment outlook over the past year the weakness in the securities securities se set markets for two years and the relentless climb in various tax levies As a result there has been an increasing ing log emphasis on saving Outlook Brighter There are two fa favorable vora ble effects of the in the rate of consumer savings sav save ings First the moderation in spending has helped prevent a more critical Inflation inflation inflation in In- binge Second the savings buildup buildup buildup build build- up puts consumers in a better position to spend now that the economy is in need of assistance Despite the drab performance of the past year apparel sales can still close closeout closeout closeout out 1970 on a strong note Prospects for 1971 are even more promising There should be e some Improvement in sales and stringent cost cutting cost cutting programs of apparel retailers should help counter Inflated inflated inflated in in- operating expenditures With women women women wo wo- men making up a larger share of the work force there is a growing market for clothing of all types Currently the Research Staff of Babson's Reports favors favors fa fa- vors purchase of the common stock of Franklin Stores for participation in the apparel retailing field for investors seeking capital appreciation by way of ofa ofa ofa a thoroughly deflated issue |